Oil markets are being pulled between escalating supply risks and weakening demand. Brent crude settled above $88 a barrel on Friday, August 14, after gaining more than 1% for the day and nearly 6% for the week. Prices are now more than 40% higher this year as disruptions involving major oil-producing and exporting regions add a sizeable risk premium.
Hormuz attacks threaten supply
Two ADNOC-operated tankers were attacked while crossing the Strait of Hormuz on Thursday, with the UAE blaming Iran. Before the war, roughly 20 million barrels of crude and refined products passed through the strait each day. U.S. officials estimate current crude flows at about 9 million barrels per day, while TD Securities puts them closer to 5 million.
Economic pressure on Iran could intensify further. U.S. Treasury Secretary Scott Bessent says Washington plans additional measures next week and could maintain its maritime blockade indefinitely. Iran says the strait will not fully reopen unless sanctions are lifted and frozen assets released, leaving Persian Gulf exports uncertain.
Demand indicators point in the opposite direction. OPEC now expects global oil demand to grow by just 580,000 barrels per day in 2026, while the IEA projects a 1.6 million-barrel-per-day decline in consumption this year. U.S. crude inventories also jumped 17.4 million barrels to 424.4 million in the week ending August 7.
Wider supply disruptions
Supply risks extend beyond Hormuz. Russia’s Novorossiysk port suspended crude exports following a drone attack, while Yemen’s Houthis claimed an attack on Saudi Aramco’s Jazan refinery, a major facility for ultra-low-sulfur diesel with a daily capacity of 250,000 barrels. Diesel margins surged after the reported strike.
MST Marquee senior energy analyst Saul Kavonic sees oil caught between geopolitical disruption and softer fundamentals. He expects prices to remain around $80 to $90 per barrel until a major new development emerges.
